Scandinavian gold exploration and mining company Akobo Minerals has reached an agreement with South African engineering company Solo Resources for the delivery of a processing plant for gold production at the Segele mine, in Ethiopia.
The commissioning of the plant is expected to start by end of the first quarter of 2023.
The plant will be tailored to process the Segele mine ore. The mine has an inferred and indicated mineral resource estimate of 69 000 oz of gold at 22.7 g/t.
The plant is designed to process 10 t/h of mass, with the possibility of upgrading to 20 t/h. The current dimensions will be able to process 4 000 oz of gold a month.
With an all-in production cost of $243/oz, Akobo believes the mining operation would be able to generate significant cash flow.
Akobo has been engaged in targeted exploration for gold in Ethiopia for more than a decade. After solid discoveries at Segele, the company announced that it would produce the gold from this area on its own. The agreement with Solo brings the project closer to production.
“We have consistently delivered on all the important milestones of recent years, but this is the most important so far. With this agreement, I am confident that we will be producing gold from the Segele mine for many years to come, and that with a solid cash flow,” Akobo CEO Jørgen Evjen said.
Despite increased uncertainty in the global trade and supply chains, deliveries and commissioning would not be significantly delayed, Evjen added.
The agreement concluded between Akobo and Solo is a fixed-price contract that is meant to provide protection against continued uncertainty in the global economy. Entering into the fixed-price contract did, however, lead to some cost increase in relation to the scoping study, Evjen said.
In addition, there were also other moderate cost increases owed to higher prices for steel, fuel and other raw materials.
Nevertheless, Evjen said Akobo did not expect that the total investments associated with the startup of mining activities to be significantly higher than what was estimated in the scoping study.
“We are confident the management of Akobo will deliver for their shareholders. We look forward to a mutually beneficial project,” said Solo CEO Craig Naude.
In terms of the agreement, Solo will design the processing plant as well as order and ship all necessary parts to Ethiopia.
Akobo will be responsible for transport to Segele and the construction of local infrastructure. Solo personnel will be present at site to supervise installation and commissioning alongside Akobo consultants and processing plant staff.